3 Great Tips for Your 2025-2026 Taxes

· Written by a TurboTax Expert • Reviewed by a TurboTax CPAUpdated for Tax Year 2025 • July 1, 2025 2:27 PM

Based on the latest reports as of July 5, 2025, the State and Local Tax (SALT) deduction cap is slated to increase from $10,000 to $40,000 for taxpayers starting in 2025.

Here’s a breakdown:

Effective Date: The increase will begin in 2025.
New Cap Amount: The temporary cap will be $40,000.
Inflation Adjustments: The $40,000 cap will increase by 1% each year through 2029.
Sunset Provision: The higher limit is temporary and is scheduled to revert back to $10,000 in 2030.
Income Phase-out: The deduction will begin to phase out for taxpayers with a modified adjusted gross income (MAGI) exceeding $500,000.

Important Notes:

This change is part of President Trump’s “One Big Beautiful Bill Act”.
The Senate’s version of the bill, which was recently passed, includes these temporary changes to the SALT cap.
The House had initially passed a version with a similar increase but for a longer duration, with annual increases through 2033.
The changes are expected to primarily benefit higher-income taxpayers in high-tax states.

How Would the 2025 House Tax Bill Change the SALT …Jun 9, 2025 — O n May 22, the House of Representatives passed H.R. 1, the One Big Beautiful Bill Act. The bill features major changes to the federal tax code, including the e…Bipartisan Policy Center
Changes to the State and Local Tax (SALT) Deduction – SmartAssetJul 3, 2025 — Explaining the Proposed Changes to the State and Local Tax (SALT) Deduction. … The SALT deduction cap will increase from $10,000 to $40,000 when President Don…SmartAsset
Trump’s ‘big beautiful bill’ passes SALT deduction limit … – CNBCJul 3, 2025 — Trump’s ‘big beautiful bill’ passes SALT deduction limit of $40,000. Here’s who benefits * The state and local tax deduction, known as SALT, provides a federal …CNBC

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OVERVIEW

There’s no reason to wait until tax time to start making sure you’ve checked all the right boxes. Here are three tips for making the most of your money when it comes to filing your 2025 taxes in 2026.

TABLE OF CONTENTS

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1. Estimate your 2025 taxes early

Making sure you’re withholding the proper amount from your paycheck is something that can pay off big at tax time. Avoid guessing the amount of taxes you’ll pay and hoping that you’ll come out ahead. Instead, estimate the actual amount and see if you need to adjust your withholdings.

This is particularly important if you’ve had a change in how much you’re earning or if your filing status has changed. When you know how these differences are going to affect your taxes, you can not only adjust your withholdings accordingly, but you can also do better financial planning for yourself overall.

The Tax Cuts and Jobs Act that went into effect on January 1, 2018, changed taxes in many ways — and that could’ve changed how much you pay in taxes. Avoid surprises by estimating in advance how your paycheck withholdings will affect your taxes. Use our online W-4 calculator to see how you should adjust your withholding if you want to increase the amount of your tax refund. Or, if you’d rather get more money in each paycheck, you can find that out, too.

2. Take advantage of all possible deductions

It might seem easier to claim the Standard Deduction instead of itemizing. However, doing so means that you may miss out on some financial advantages that you might not even have realized were available. Among the most commonly overlooked tax deductions are:

Reinvested dividends: This one is easy for a lot of taxpayers to miss because it’s not technically a deduction, but a reduction. If you’re automatically having dividends from your mutual funds reinvested in extra shares, you can include them in your cost basis. This means that, when you sell your shares, you might reduce your taxable capital gain.
Out-of-pocket charitable contributions: You don’t have to make big donations to enjoy a write-off; you can also include small expenses, such as spending money on supplies to make signs for your child’s eligible school fundraiser. Keep track of small items and expenses, and you might be surprised at how they add up.
State sales tax: You can write off either your state and local income taxes or your state and local sales taxes (but not both). The IRS provides a calculator to help you determine how much of a deduction for sales tax you can take.
Student loan interest (even if someone else paid it): This recent change lets the payments qualify for the deduction even if your parents (or someone else) paid the bill. Under new guidelines, the IRS views it as if you were given the money and used it to pay the student loan.
Child and Dependent Care Tax Credit: A tax credit is valuable because it can reduce your tax bill and reduces how much of your income can be taxed. The Child and Dependent Care Credit provides a credit for the money that you spend on qualifying individual.
Earned Income Tax Credit (EITC): If you earn a low to moderate income, you could be missing out on thousands of dollars by not claiming this. It’s even available if you’re self-employed. If you meet the qualifications, this can net you a refund — even if you didn’t have to pay any taxes.
State income tax paid on last year’s return: If you paid money on your state income tax return last year, this payment can be used as an itemized deduction.
Points paid to finance your home: If you paid mortgage points, you may be able to deduct the amount on your return. To deduct all the points in the year you paid for them, you need to meet certain criteria. Otherwise, you may be able to deduct them over the life of the loan.

Even if you take the Standard Deduction, there are still some additional deductions that could be available to you. Generally, these are referred to as adjustments to income. They reduce your gross income and can lower your overall tax liability. Among the overlooked adjustments are:

educator expenses
student loan interest
early withdrawal penalties for savings accounts and CDs
health Savings Account contributions
deductible retirement account contributions
jury duty pay or reimbursements required to be turned over to your employer

3. Play the “matchmaker game” with capital gains and losses

If you’ve sustained capital losses during the year, take heart. You can use them to offset capital gains triggered by a market up-turn. Take a hard look at your portfolio and consider how you can match one transaction against the other to reduce your tax burden.

Remember that you’ll first need to match long-term against long-term and short-term against short-term. Net losses of either type can then be deducted against remaining gains. If you’re facing a really big capital gain, you might consider selling some losers before year’s end.

Additionally, you can use up to $3,000 (or $1,500 if you’re married filing separately) in leftover to offset your regular taxable income each year. If your capital losses are greater than $3,000, the excess amount can be carried over in subsequent years. But don’t wait until the last minute. The longer you wait, the less time you’ll have to make the right matches.